TOM CORNISH, Bankruptcy Judge
On the 30th day of August, 2004, the Motion for Order Approving Auction and Bid Procedures, filed by the Debtors (Docket Entry #329); Objection of Associated Wholesale Grocers, Inc., to Debtors' Motion for Order Approving Auction and Bid Procedures (Docket Entry #352); Objection of CS Acquisitions, LLC to Motion for Order Approving Auction and Bid Procedures (Docket Entry #356); Joinder of Arvest Bank, Fayetteville in the Objection of Associated Wholesale Grocers, Inc., to Motion for Order Approving Auction and Bid Procedures (Docket Entry #357); Objection to Auction and Bid Procedures, filed by Oklahoma Grocers Association, Inc. (Docket Entry #358); Joinder of the Community State Bank to Objection of CS Acquisitions, LLC to the Debtors' Motion for Order Approving Auction and Bid Procedures (Docket Entry #364); The Official Committee of Unsecured Creditors' Response to Objections to Motion for Order Approving Auction and Bid Procedures (Docket Entry #374); and Debtors' Response to Objections to Motion for Order Approving Auction and Bid Procedures (Docket Entry #388) came on for evidentiary hearing. Appearances were entered by Sam Bratton, Attorney for Debtors; Mark Benedict and Neal Tomlins, Attorneys for Associated Wholesale Grocers ("AWG"); Gary Bryant and Sarah Hall, Attorneys for CS Acquisitions, LLC ("CS"); Steven Bugg, Attorney for Fleming Companies, Inc. ("Fleming"); Jackie Hill, Attorney for Oklahoma Grocers Association ("OGA"); Jason Bramlett and Steve McCartin, Attorneys for the Official Committee for Unsecured Creditors ("Committee"); Amy Wilbourn, Attorney for Arvest Bank, Fayetteville ("Arvest"); John Richer, Attorney for Martinous Produce Co., Inc. ("Martinous") and Benenson Capital Company; Terry M. Thomas, Attorney for Harp's; Ron Wright, Attorney for National Bank of Sallisaw; and Paul Thomas, Attorney for the U.S. Trustee. After listening to the legal arguments presented, this Court does hereby enter the following findings and conclusions in conformity with Rule 7052, Fed.R.Bankr.P., in this core proceeding.
The Debtors' Motion was filed following an announcement to this Court that the parties in this case agreed to simultaneously proceed down two different paths. The first path, preferred by the Debtors, would lead towards reorganization. The second path would lead towards selling substantially all of the assets of the Debtors. In the present Motion, the Debtors request approval of the terms, conditions, and procedures to be utilized in an auction and bid process.
The Motion provides for bidding on all of the Debtors' assets or parts of the assets. It also allows the Debtors or the Committee the right to select lower non-credit bids as the highest or best offers. The Motion sets up certain deadlines which were amended by the Debtors at the hearing. The deadline for competing bids would be October 24, 2004, with an auction date of November 1, 2004. Debtors also modified the Motion at the hearing to include a breakup fee of $200,000, and stated that there would be no topping fee. The Motion also allows the Debtors and the Committee to reject all bids and cancel the auction.
There is a disagreement between the parties as to whether the creditors should be allowed to credit bid pursuant to 11 U.S.C. § 363(k). In other words, there are more disagreements and diametrically opposite theories presented than agreed ones. Debtors and the Committee argue that allowing credit bids would chill the bidding process, and could result in a fractured and unfavorable result for the Debtors' estates. Creditors argue that their rights as secured parties to credit bid on the assets should not be impaired and their rights under § 363(k) should be preserved.
The Motion also provides that the submission of a competing bid constitutes a waiver of any rights of first refusal. AWG objects to this, stating that AWG should not have to waive its right of first refusal and should be allowed to match any offer to purchase the Debtors' assets. Debtors again argue that allowing AWG's right of first refusal would chill the bidding process.
OGA objects, stating that it has a claim against the Debtors in the approximate amount of $905,000 based upon the Debtors' sales of money orders and the failure to remit those trust fund proceeds to OGA. OGA argues that its pre-petition trust funds should be segregated by the Debtors and should not be sold in an auction as the Debtors' assets.
The Debtors came into the hearing and made substantial amendments to its Motion without prior notice to interested parties. The objecting parties have asked this Court to put certain procedures in place, including the right to credit bid, disallowing the Debtors and the Committee's right to reject all bids and cancel the auction, AWG's right of first refusal, and a segregation of OGA's funds. Based upon these factors, this Court finds that it is literally impossible at this time to frame an auction procedure that would encourage bidders; to oppose a sale; or allow the Court to confirm a feasible plan.
This Court finds that the Motion should therefore be denied without prejudice to filing an amended motion. The denial of this Motion is entered in the spirit that the Debtors will be moving on with the prompt filing of a plan. Should a potential buyer be found then the Court will entertain a motion and procedure for an expedited sale or auction. With this in mind, the Court will only approve a bid procedure or set its own procedure that is simple and clear so that bids will be encouraged rather than chilled.
IT IS THEREFORE ORDERED that the Motion for Order Approving Auction and Bid Procedures is denied at this time without prejudice.